Artificial intelligence (AI) technology giant Nvidia (NVDA +1.13%) is slated to report its results for the fourth quarter of fiscal 2025 (ended Jan. 26) on Wednesday, Feb. 26, after the market close.
Nvidia's upcoming earnings release is probably the most anticipated of this quarterly earnings season. That's because the company is not only widely viewed as a bellwether, or indicator, for the red-hot AI space, but also of the tech sector in general and, to some degree, even the entire market.
Moreover, investors will be looking forward to what management has to say about Chinese start-up DeepSeek. On Jan. 27, shares of Nvidia dropped 17% due to concerns about a potential slowdown of spending on its graphics processing unit (GPU) chips and related tech. The sell-off was sparked by DeepSeek's announcement that it trained an open-source AI model for significantly less money than ChatGPT owner OpenAI and others have spent to train their models.
Many market watchers have expressed doubts about the veracity of some of DeepSeek's statements, but some investors are probably still uneasy about the topic even though Nvidia stock has largely recovered. Shares were trading at $142.62 before the DeepSeek sell-off and closed at $139.23 on Feb. 19.
Nvidia's Q4 guidance and Wall Street's estimates
| Metric | Q4 Fiscal 2024 Result | Nvidia's Q4 Fiscal 2025 Guidance | Nvidia's Projected Growth | Wall Street's Q4 Fiscal 2025 Consensus Estimate | Wall Street's Projected Growth |
|---|---|---|---|---|---|
| Revenue | $22.1 billion | $37.5 billion | 70% | $38.1 billion | 72% |
| Adjusted earnings per share (EPS) | $0.52 | $0.83* | 60% | $0.84 | 62% |
Data sources: Nvidia and Yahoo! Finance. Fiscal Q4 2025 ended Jan. 26. *Calculation by the author based on the metrics for which management provided guidance.
NASDAQ: NVDA
Key Data Points
Nvidia's earnings beat track record is fantastic
I reviewed Nvidia's results for the last 18 quarters, or four and a half years. This data goes back to the quarter ended in late July 2020. I also separated out the results of the last four quarters.
| Period | Earnings* Results Relative to Wall Street's Consensus Estimate | Magnitude of Earnings Beat (Average) | Magnitude of Earnings Beat (Range) |
|---|---|---|---|
| Last 18 reported quarters | 16/18 beats = 89% |
11%* |
5% to 32%* |
|
Most recently reported four quarters | 4/4 beats = 100% | 8.8% | 5.7% to 11.4% |
Data source: Nvidia. Calculations by author. *Earnings in the form of adjusted earnings per share (EPS). **Rounded to nearest whole number.
Nvidia has a great track record of exceeding Wall Street's earnings estimates, so the probability seems high that it will do so again. Its average earnings beat, percentage-wise, has been a little smaller over the past four quarters than over the past 18 quarters.
Nvidia's post-earnings-release stock price movements
Investors should focus on Nvidia's results and guidance, and not be overly concerned with how the stock moves after its earnings release. For long-term investors, caring too much about daily price movements is a waste of time and energy. (Eye-opening tidbit: Saving just 10 minutes of wasted time a day adds up to about 61 hours a year.) If Nvidia continues to churn out strong results for years ahead -- and it seems poised to do so -- the stock price should naturally rise.
That said, I know many folks still want to see this data, so here it is:
| Quarter | Period Ending | Magnitude of Earnings Beat/(Miss)* | Stock Price Change Day After Earnings Release |
|---|---|---|---|
| Q3 Fiscal 2025 | Late October 2024 | 9% | 0.5% |
| Q2 Fiscal 2024 | Late July 2024 | 6% | (6.4%) |
| Q1 Fiscal 2025 | Late April 2024 | 10% | 9.3% |
| Q4 Fiscal 2024 | Late January 2024 | 12% | 16.4% |
| Q3 Fiscal 2024 | Late October 2023 | 19% |
(2.5%) |
| Q2 Fiscal 2024 | Late July 2023 | 32% |
0.1% |
| Q1 Fiscal 2024 | Late April 2023 | 18% |
24.4% |
Data sources: Nvidia's earnings reports, Yahoo! Finance, and YCharts. *Rounded to nearest whole number.
The data above is for the four quarters of fiscal 2024 and the three quarters reported so far for fiscal 2025. This is the period for which generative AI -- the tech behind OpenAI's ChatGPT chatbot and other newer chatbots -- has boosted the company's results.
Notice there is not even a modest correlation between the size of the earnings beat and the stock's price movement the next day. There are primarily three reasons for this dynamic:
- Guidance can affect the stock price as much as, if not more than, the current quarter's results.
- Nvidia stock does not move in a vacuum; broader industry factors and overall market dynamics can impact its movements.
- Some investors take profits after better-than-expected earnings, exerting downward pressure on the stock price.
Should you buy Nvidia stock before or after it reports earnings?
If you're a long-term investor, it should make little difference over the long term if you buy Nvidia stock before or after it reports its quarterly results. (Granted, Nvidia stock jumped 24.4% in May 2023 after the fiscal Q1 2024 results were released. But this magnitude of a post-earnings-release move is rare. This particular move was due to generative AI recently bursting onto the scene, resulting in Nvidia not only crushing earnings expectation, but also issuing much higher guidance than Wall Street had anticipated. And long-term investors aren't concerned with a move in such a short time frame.)
But if you're the type of person who will kick yourself for making what you view as the "wrong" timing decision and missing out on, for example, a 10% daily gain or incurring a 10% daily loss, I have a suggestion for you: Consider buying about half your shares before the earnings release and half after the release.
